Over the long term, today's declines of Nvidia (NVDA) and Taiwan Semi (TSM) will prove to be overdone, Wedbush analyst Matt Bryson told CNBC today.

However, the analyst did warn that, in the shorter term, the Trump administration's tariffs will result in "demand destruction", which will negatively affect all chip makers.

Tariffs Will Not Impact NVDA, TSM Much in the Long-Term, Bryson Says

Nvidia will remain the leader in AI chips and continue to face "limited competition," while TSM will still be the only company that can produce advanced chips, Bryson said. Consequently, over the longer term, the tariffs will not significantly change the companies' trajectory, he believes.

Asked whether he sees the declines of their stocks today as overdone, Bryson said, "I think from a longer-term perspective, that's definitely the way to look at it."

"Demand Destruction" in the Short Term

In the short term, chip makers will be hurt by "demand destruction," according to Bryson. That's because, as the prices of products with chips in them go up, fewer of them will be bought, the analyst explained.

On the other hand, semiconductor makers "with more exposure to large data centers" will probably be less impacted than those who obtain lower proportions of their revenue from such data centers, he theorized.

While we acknowledge the potential of NVDA, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.